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					     Situation and Evolution
   in Europe and in the World

           John SCOWCROFT
Head of Environment and Sustainable Development

             MEDELEC Workshop
           Casablanca, 20 March 2008
Climate Change Update
     Beyond Bali
               Background (1)

• Most significant COP since Kyoto (1997)
  – Effort to create a new, comprehensive post 2012
  – Largest ever attendance ~15,000 delegates

• Significant pressure for an outcome
  – IPCC Fourth Assessment Report heightens concerns
  – EU, NGO pressure for action, especially by US
  – US-led Major Economies Process to build an
    alternative to Kyoto with participation by Developing
  – Following Australian election, Rudd govt. ratifies
            Background (2)
• Ongoing
  – Developing Countries resistance to emissions
  – US rejection of Kyoto Protocol

• Expectation to develop a Bali Roadmap on
  Process to
  – Launch a new negotiation for post-2012 period
  – Outline major elements
  – Complete agreement in 2009 at COP 15
                       Key Issues

• Future Developed Countries commitments under
  Kyoto Protocol (§3.9)
• Review of progress under Kyoto Protocol (§9)
   – Developing Countries: focus on Annex 1 Implementation
   – Developed Countries: focus on adequacy of global effort

• Development of process for Long-term Cooperative
  Action under UN FCCC by all Parties:
  Building blocks
       Mitigation      Adaptation
       Technology      Finance
  Intense, Divisive Negotiation (1)

• Major stumbling points
   – Developed Countries emissions reductions
   – Participation of developing countries
   – Role of US

• Emissions reductions
   – EU strong desire to embed indicative range (25-40% below
     1990 levels by 2020) within the mandate
   – US (with Russia, Japan, Australia) rather than numbers:
     “recognising that deep cuts in global emissions will be
  Intense, Divisive Negotiation (2)

• Developing Country commitments:
  consideration of “nationally appropriate
 mitigation actions by developing country
 Parties..., in a measurable, reportable and
 verifiable manner”
• Noteworthy statements
  – EU threat to boycott US MEP meetings
  – Yvo de Boer (Executive Secretary) and Al
    Gore publicly note that a new US delegation
    will take charge in 2009
The Bali Roadmap: Two Tracks through 2009

 • Track 1 Kyoto Mandate: Ad Hoc Working Group on
   §3.9 (since 2005)
    – Future Annex 1 Commitments
    – 2nd Kyoto Period, post 2012

 • Track 2 UN FCCC: Ad Hoc Working Group on Long-
   term Cooperation
    – Long-term goal (vision on global emissions
      reductions to stabilize GHG concentration)
    – Building blocks:
            Mitigation   Adaptation
            Technology   Finance
             Ways Forward

• Negotiation to start March-April 2008
  – Establish work plans
  – Consider means to elicit input from Parties
    and others: business, research, civil society

• Parallel efforts
  – US-led Major Economies process aiming for
    major report out in June-July, 4-5 meetings
    1st half 2008
  – G8 process
EU Commission Climate Package
              Commission Proposals
• An EU Decision on Burden Sharing the EU greenhouse
  gas target to 2020 (-20%; -30%)
• An EU Directive on Burden Sharing the EU renewable
  energy target to 2020 (20%) including 10% biofuels
• A revised EU Directive on emissions trading from 2013
• A Directive on the framework for Carbon Storage
• A Commission Decision revising the Code on
  Environmental State Aid
• A proposal on a new structure for the development and
  demonstration of sustainable coal technologies
   Legislative processes essentially must be complete by April 2009 –
   otherwise all proposals fall once Parliament is dissolved for June 2009 elections
   (Re-introduction would delay approval to 2011/12 creating major uncertainties)
         GHG Burden Sharing - Main details

• Decision of European Parliament and Council
• Key elements
   – 2005 is base year
   – Emissions covered by the Emissions Trading Directive are excluded
       • BSA covers ~58% of total EU GHGs
   – Main assessment criteria is the relative GDP of MS
   – Equity consideration
       • Max. imposed reduction effort      = - 20% of 2005 emissions
       • Max. allowed increase              = +20% of 2005 emissions
   – Annual limit to apply with 2% banking or borrowing allowance
       • Derived as linear reduction from 2013 (≤ avg. 2008-10) to 2020
   – Restricted allowed use of external credits by Government
       • 3% of relevant 2005 emissions
       • Unused credit allowances can be swapped
   – Adjustment if new UN agreement delivered
     Main details – RES target (1)
• New EU Directive on RES
• Key elements
  – (New) Definition of term ”Final consumption of energy”
      • Ambiguous and could result in more stringent target
  – National 2020 target determined
     • Current contribution (%) + 5.8% (50% of current EU gap) + %
       based on relative GDP
     • 10% RES in transport biofuel
  – Biennial national indicative targets established from 2011-12
  – Provision for Renewable Obligation
  – (Tradable) Guarantee of Origin (GOO) from renewable sources
     •   System to label all RES (>5 MWth) on request
     •   Mutual recognition between MS
     •   May be used for compliance purposes under a RO
     •   [Surplus] May be transferred out of MS once national target met
           – Subject to prior authorisation
       Main details – RES target (2)
    – Grid to facilitate further development of RES electricity
    – Priority access to grid and priority dispatch for RES
         • Subject to grid security
    – May require TSO/DSO to carry grid connection and
      reinforcement costs (full or part)
    – Connection costs must discount any cost-benefits
      arising from a connection and connections must be
      open to tender
    – National action plans required (March 2010)
         • Updated if indicative interim targets not met
    – Biofuel sustainability criteria defined (with MRV)
    – Mandatory RES in new/refurbished buildings
    – Force majeure provision

All subject to change; main concern of MSs is to protect national support systems
          Main details - EU ETS (1)
• Fundamental revision of existing Directive
• Key elements:
   – Centrally defined annual cap
      • [-21% of 2005 emissions (~1720 Mt CO2e) in 2020]
• Adjusted down if -30% adopted
      • Annual reduction rate (1.74%) defined, continues post 2020
          – Adjusted when -30% target becomes operational
          – Review of rate by 2025
   – 100% auctioning of allowances
      • From [2013] for electricity sector and CCS
      • From [2020] for all other sectors, with progressive increase from
      • 90% of cap allotted to MS pro-rata to 2005 share of EU emissions
      • 10% residual allotted to 19 least developed MS (including IT, SE,
          – Individual amounts to be determined
      • Commission to prepare a Regulation governing auctioning
      • Exclusion of nominated sectors exposed to global competition
         Main details - EU ETS (2)
– Free allocation to be based on EU-wide benchmarks / rules
    • 5% of EU cap to be set aside for new entrants
– Use of CER/ERU credits prohibited for -20% target
    • Use of unutilised CER/ERU quota from 2008-12 period permitted
– Use of CER/ERU credits permitted for -30% target
    • Allowed use = 50% of difference between -20% and -30% target
– Treatment of on-site electricity production
– Provision to create allowances from domestic off-sets
– Provision to link scheme to non-national schemes (e.g.
– Possible special provision for energy intensive industries
– New sectors (and gases) included

All subject to change; however principle of auctioning already established

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